PDL BioPharma Acquires Portion of Royalty Interest for $65.6 Million

PDL BioPharma recently announced it has acquired a portion of the University of Michigan’s worldwide royalty interest in Cerdelga (eliglustat) for $65.6 million. Cerdelga, an oral therapy for adult patients with Gaucher disease type 1, was developed by Genzyme, a Sanofi company. Cerdelga was approved by the US FDA on August 19, 2014.

Under the terms of the royalty agreement, PDL will receive 75% of all royalty payments due under U-M’s license agreement with Genzyme until expiration of the licensed patents, excluding any patent term extension. The royalty rate used to calculate the royalties to be paid by Genzyme to U-M was not disclosed by the parties. In addition to the recent FDA approval, marketing applications for Cerdelga are under review by the European Medicines Agency and other regulatory authorities.

Cerdelga was developed to provide an effective oral treatment alternative for adult patients with Gaucher disease type 1, and to provide a broader range of treatment options for Gaucher patients and physicians. Genzyme’s clinical development program for Cerdelga represented the largest clinical program ever conducted in Gaucher disease, with approximately 400 patients treated in 29 countries.

“Our acquisition of the Cerdelga royalties significantly adds to our already diversified portfolio of biopharmaceutical royalties,” said John McLaughlin, President and CEO of PDL BioPharma. “We continue to provide leading institutions, such as the University of Michigan, with capital that will allow them to pursue their funding initiatives, while also allowing PDL to acquire meaningful income generating assets and to create shareholder value.”

“Cerdelga represents the first chemical entity invented at the University of Michigan to receive FDA approval and illustrates the societal benefits of transferring discoveries from university research,” said Kenneth Nisbet, Associate Vice President for ResearchTechnology Transfer at the University of Michigan. “We’re very pleased with our agreement with PDL, which enables us to accelerate our investments in research and education. We strongly believe in Cerdelga’s potential, which is why we have retained a portion of the royalty rights.”

Cerdelga is a novel ceramide analog given orally and was designed to partially inhibit the enzyme glucosylceramide synthase, resulting in reduced production of glucosylceramide. Glucosylceramide is the substance that builds up in the cells and tissues of people with Gaucher disease. The concept was initially developed by the late Norman Radin, PhD, from the University of Michigan, and further developed by James A. Shayman, MD, also from the University of Michigan, prior to and after licensing the compound to Genzyme.

PDL manages a portfolio of patents and royalty assets, consisting primarily of its Queen et al. antibody humanization patents and license agreements with various biotechnology and pharmaceutical companies. PDL pioneered the humanization of monoclonal antibodies and, by doing so, enabled the discovery of a new generation of targeted treatments for cancer and immunologic diseases for which it receives significant royalty revenue. PDL is currently focused on intellectual property asset management, acquiring new income generating assets, and maximizing value for its shareholders. For more information, please visit www.pdl.com.

U-M Tech Transfer is the University of Michigan’s organization responsible for the transfer of U-M research discoveries to the marketplace. U-M Tech Transfer licenses these inventions to existing businesses and assists in launching new startups based on these inventions to ensure that the benefits of these research discoveries reach the general public. For more information, visit www.techtransfer.umich.edu.